Report: Welfare Reform Lifted Many Families Out of Poverty

A new Manhattan Institute report by scholar Scott Winship marks this month as the 20th anniversary of federal welfare reform that critically changed antipoverty policy. It specifically “changed an open-ended cash benefit, Aid to Families with Dependent Children, to a more limited entitlement, Temporary Assistance for Needy Families.” The report found:

“Children—in particular, those in single-mother families—are significantly less likely to be poor today than they were before welfare reform: child poverty overall fell between 1996 and 2014. This is the case because of household earnings, lower taxes, several refundable tax credits, food stamps and other noncash benefits.

“Deep poverty”—defined as having a family income below half the official poverty line—was probably as low in 2014 as it had been since at least 1979.

Practically no children of single mothers were living on $2 a day in either 1996 or 2012 (the latest year for which we have reliable statistics), once the receipt of all government benefits are factored in. In 2012, fewer than one in 1,500 children of single mothers were living in what is called “extreme poverty.” This finding is consistent with other research.”

What makes this welfare reform historic is that skeptics deemed the reform disastrous, but instead the reform helped many families out of unemployment and into employment. However, the Great Recession still raises some concerns that the welfare reform has caused some poor families to become poorer.